'I'm definitely not stepping down for another 5 years'
From vegetable oils to cutting edge information technology services, the Azim Premji story is too well documented to bear repetition. As chairman of Wipro, he is in the vanguard of India's software exporters. He says Wipro is the largest independent provider of R&D services in the world today with a team of more than 10,000 people. Sandeep Bamzai spoke to him about industry and company specific issues at length.india Updated: Dec 11, 2005 09:55 IST
From vegetable oils to cutting edge information technology services, the Azim Premji story is too well documented to bear repetition. As chairman of Wipro, he is in the vanguard of India's software exporters. Sandeep Bamzai spoke to him about industry and company specific issues at length.Excerpts:
There has been a lot of churn at Wipro and you have lost some key people like Vivek and Raman. Are organisations bigger than individuals? How does the Wipro model work? It has been a great repository for good managers in the past.
Vivek and Raman were good leaders. Both contributed immensely to Wipro, and then they wanted to do something else with their lives and careers.....we respect that. As for the impact, we do structural and succession thinking every year as a robust and tight processfor about 100 of the top leaders in Wipro, and every year the lookout horizon is three years.
In this battle over infrastructure woes, why is it you have not bothered to speak out? You have set up a big operation in Kolkata, is Wipro now comfortable with moving out of Bangalore in terms of new facilities?
With respect to operations in other cities, in our business model it is very important to have a geographical spread of facilities. We cannot put all the eggs in one basket. Geographical diversity equips us to handle contingencies better and this is something that we also advise our clients to do. Today our largest base continues to be Bangalore.
I feel that the controversy over infrastructure has become counterproductive and would like to stay out of it.
Does the move to unionise workforces in IT and ITES trouble you? What is your view on this?
Today's BPO industry suffers from an extremely high attrition rate due to high demand for these professionals. Demand clearly outstrips supply of talent and with a porous workforce, unions will find it difficult to sustain membership within an organisation, which will impact their ability to build a critical density. Worldwide, union memberships are declining as education levels rise and the youth seek upward mobility.
The rupee has depreciated by close to 4.5 per cent in a very short span of time, going forward what will its impact be on your bottomline?
There are several things that affect margins, like variations in wages, procure ment, billing rates, utilisation ratio, etc. All of these can put pressure on the margins. Exchange rate fluctuation is just one of the factors. We account for all this during our planning cycle and set a target to improve our process efficiencies to counter all the factors I mentioned. The question of how the depreciation will affect our bottomline depends on how we progress towards achieving improved process efficiencies. I do not see a very significant impact.
Every Indian IT company is seeking a forward path, a business model. How will Wipro's evolve in the short term? Are you going to continue looking at service line expansion?
Wipro has been a pioneer in remote delivery of services from India be it R&D outsourcing, infrastructure management or testing, and our differentiated service lines are exhibiting very robust growth. We observe good traction in our remote infrastructure management services. We have made investments in this area as there is an opportunity to grow very rapidly in this space and this will also help us getting integrated deals, which serve both the customer and us.
Similarly, our testing practice is another area which has seen very good growth and we are now one of the largest providers of independent testing services.
I also feel that consulting skills are very important to compete with IBM/Accenture and Wipro has made a good start with the Nervewire and AMS acquisitions. As we work on more output-based engagements, process consulting will be a differentiator.
Along with this, our traditional strengths in the field of R&D services will also be a very important driver. We are the largest independent provider of R&D services in the world today with a team of more than 10,000 people. We have to maintain this leadership position.
With an overwhelming control over shareholding, will Wipro become a family con cern? There is also talk that you might retire, is all this speculation or is there some substance to it?
Over a period of time I am looking at ways to reduce my shareholding. I am definitely not retiring for the next five years, and am very much involved in the company's leadership as executive chairman.
After an initial spurt of acquisitions including the big ticket Spectramind, things haven't exactly taken off on that front. Are you looking at more acquisitions?
Wipro has clearly been a trendsetter when it comes to acquisitions and growing inorganically. As per our policy we are always on the lookout for acquisitions which will add value to our business. Acquisitions have a very long gestation period and a great deal of thought process and evaluation has to go before we make a decision. Our stand remains that we are cautious about acquisitions but are always open minded towards inorganic growth. We are currently evaluating some opportunities.
Do the new SEBI guidelines mean that you will need to dilute further equity or are you able to circumvent it as a tech company?
We currently comply with all existing guidelines and will continue to comply with any new guidelines in this matter.
Are your troubles with the tax department over? What would you like to see in the coming budget as a topnotch tech player?
I assume you are referring to the issue of tax holidays for new development centers. It has now become an industrywide issue over the interpretation of certain clauses in the agreement. We have made representations to the authorities on this and are awaiting a decision. I cannot comment any further on this. We are increasingly facing global competition in the IT industry and my expectation is that the budget should help us stay competitive in a global marketplace.
First Published: Dec 11, 2005 09:55 IST